Intel stock posts biggest five-day gain in history amid report of potential breakup
The Wall Street Journal reported late Saturday that Broadcom (AVGO) is considering making a bid for Intel's product business, which designs semiconductors for computers and servers. The Journal, which cited people familiar with the matter, said TSMC has looked at controlling some or all of Intel's factories, potentially as part of an investor consortium. The companies have not submitted deals to Intel, and the talks are preliminary and informal, the Journal wrote.
Broadcom shares fell nearly 2% Tuesday, while US-listed TSMC shares were down less than 1%.
Intel's 16% gain Tuesday was its biggest single-day jump since March 2020. The surge puts Intel shares up 38.5% over the past five days, the largest gain in the company's history as a public company.
Intel stock has been on a tear over the past week. The stock notched its biggest weekly gain since 2000 last Friday as the US signaled support for domestic chipmaking and reports surfaced that the US government was allegedly in talks with TSMC to support Intel's turnaround efforts.
Intel's manufacturing business primarily makes chips for itself (Intel's product business) but opened up a foundry — in other words, began taking on external customers — in 2022 under the leadership of then-CEO Pat Gelsinger. Gelsinger had pushed to launch a foundry business competitive with Taiwan's TSMC in an attempt to right Intel's struggling manufacturing division, which had suffered from setbacks since the mid-2010s.
The turnaround effort has not been successful to date, given that Intel's manufacturing business has struggled to take on outside customers and continues to bleed cash. Intel's earnings disappointed investors throughout 2024, and the stock fell around 60% last year. Gelsinger was ousted by Intel's board in December. The company has become an acquisition target, and the interest from Broadcom and TSMC follows reports of potential takeovers by Qualcomm (QCOM), Arm (ARM), and Apollo last year.
Wall Street analysts have favored Intel splitting its business into two. Raymond James analyst Srini Pajjuri wrote in a note to investors Monday: "In our view, splitting Intel Product and Foundry is the key to unlocking value."
Intel announced plans last year to establish an independent subsidiary for its foundry business, separating its finances and operations from its products division. Analysts viewed the move as the company paving the way for a potential split.
Some analysts were less optimistic about an Intel breakup. Bank of America's Vivek Arya said in a Tuesday note to investors that "any potential INTC split could be time-consuming and complicated," noting constraints related to Intel's US CHIPS Act funding, which limits its ability to fully sell its manufacturing business.
A Intel-TSMC deal could also face global regulatory hurdles and antitrust concerns from China, Arya said.
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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